GCC banks raise interest rates after Fed hike

Flags of the Gulf Cooperation Council countries

The central banks of Saudi Arabia, the UAE, Kuwait, Qatar and Bahrain hiked their benchmark interest rates following suit of the US Federal Reserve, which decided today, Sept. 21 to raise its key rate by 75 basis points (bps).

The Saudi Central Bank (SAMA) decided to lift its reverse repo rate from 250 bps to 325 bps and the repo rate to 375 bps from 300 bps.

The Central Bank of the UAE (CBUAE) also increased its base rate for the overnight deposit facility (ODF) by 75 bps, effective from tomorrow, Sept. 22.

The CBUAE maintained the rate applicable to borrowing short-term liquidity from the regulator through all standing credit facilities at 50 bps above the base rate.

Meanwhile, the Central Bank of Kuwait (CBK) also hiked its discount rate by 25 bps to 3% from 1.75%, effective from tomorrow.

Qatar Central Bank (QCB) raised its repo rate by 75 bps to 4%. It also increased its deposit rate by 75 bps to 3.75% and the lending rate by 75 bps to 4.50%.

The Central Bank of Bahrain (CBB) increased its key policy interest rate on the one-week deposit facility by 50 bps to 1.75% from 1.25%. It also hiked the overnight deposit rate to 1.50% from 1%, the four-week deposit rate to 2.5% from 1.75% and the lending rates to 3% from 2.5%.

The Fed's move is the second this year after a smaller rise in March.

In April, Federal Reserve Chairman Jerome Powell said the central bank could raise the interest rate by 50 basis points in May to control inflation.

The Federal Reserve raised today, Sept. 21 interest rates by 75 basis points (bps) in line with expectations, according to data available with Argaam. 

The Fed raised target interest rate to a range of 3%-3.25%, from 2.25% and 2.50%.